It’s been nothing short of amazing how many people keep calling for a bear market, correction or even single digit pullback. On top of that, we are now hearing calls that the VIX (volatility indicator) is either broken or no longer works. Lots of sour grapes out there! The bottom line is that the ingredients for a major decline are not present and have not been present for a long while. That’s going to change, but it will take some time to do so.
With all that said, stocks do look a little tired, but that doesn’t mean they have to go down. They could also move sideways to repair themselves. If we do get any weakness, it should be yet another in a long line of pullbacks to buy.
On the sector side, all is not well, but it’s good enough to keep this aging bull market going. I discussed energy a few weeks ago as being in a position to form a low and it has rallied nicely. However, it’s now at the point where the bears should make their stand if they are going to. If not, this will be a good sign that a more significant low may be forming. At the same time, transports have quietly pulled back 2%+ this week. The bull should attempt a stand sooner than later and this index could give us a clue as to the market’s next move.
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